Digital transformation and AI adoption: 5 lessons from senior leaders

Organizations have high aspirations for digital transformation and AI use, but face several challenges, according to Boston Consulting Group.

Digital transformation: A high-level overview for professionals TechRepublic Senior Writer Teena Maddox summarizes why digital transformation is key for companies to stay relevant.

Many companies are cresting the first wave of digital transformation, increasing reach and customization, improving processes, and boosting productivity, while also beginning to incorporate big data into workflows. Now, executives are turning to artificial intelligence (AI) adoption to fight for digital supremacy against competitors, with high aspirations for its success even in the most traditional of industries, according to a Tuesday report from Boston Consulting Group.

In this next wave, organizations want to shift from digital iteration to innovation, using AI to develop new offerings and change business models, the report found. The report interviewed more than 20 executives at companies with major digital programs underway to determine where businesses stand when it comes to AI implementation.

SEE: Special report: How to implement AI and machine learning (free PDF) (TechRepublic)

Here are five lessons learned from senior executives when it comes to implementing AI.

1. CEO support is necessary, but insufficient

Digital transformation projects require full CEO support for success over the long term. However, they also require support from the executives who control budgets, personnel decisions, and day-to-day priorities and resources, the report noted. Support from these executives can be the difference between success and failure in these initiatives.

2. IT applications come before infrastructure

Digital transformation can't succeed without an IT and data overhaul, according to the report. Even if organizations have not perfected their advanced IT architecture, they should still begin building applications and services to see at least some of the benefits early on, even if implementation is not elegant. Taking this approach can provide focus and momentum, and avoid drawn-out and disappointing system rollouts, the report noted.

3. Digital efforts take talent, technical skills, and culture

Digitally transforming companies are working hard on people issues, ranging from developing technical skills to forming new partnerships that access talent, the report found. However, many organizations still find it difficult to find the right talent like developers and data scientists to support their digital ambitions. Creating a culture that embraces change is another major challenge, and companies are focusing on fostering collaboration between IT and the business to do so, the report found. Many are turning to Agile methods in their culture change efforts to improve speed and flexibility, it noted.

4. Digital often requires an ecosystem

Organizations will increasingly need to adopt an open innovation and ecosystem approach to acquire the needed data, technologies, and services, according to the report. This approach can often lead to more and better data, which can translate to better results, it added.

5. Speed wins

Executives are highly concerned about how fast they can get digital programs up and running, the report found. When asked what these leaders might have done different to get ahead in their digital transformation efforts, the majority said they wished they had started sooner, and moved faster.

AI: The coming digital transformation wave

Digital and AI transformations have reached a critical moment, leaving businesses on the brink of two fundamental shifts, according to the report.

The first shift is the rise of what Boston Consulting Group calls "AI@scale." AI@scale goes beyond using big data and analytics to generate digital transformations, and on to using AI to tap the large pools of unstructured knowledge in images, videos, text, and machine data generated through the Internet of Things (IoT). With this data, companies will be able to start to rely on AI to create new products and services, the report noted.

The second shift is in the fight for digital supremacy, according to the report. While operational and cultural issues have dominated the first wave of digital transformations, strategy will play a larger role in the future, as companies move beyond operational improvement toward creating competitive advantages.

"Many companies have embarked on large digital programs in recent years and have started to ramp up their AI initiatives. In most cases, they need to do more," the report stated. "With both digital and AI shaking the foundations of entire industries, fundamental strategic and operational questions have moved to center stage. Companies will no longer have separate digital and AI strategies. They will have corporate strategies deeply infused with both."

For more, check out Five steps for getting started with AI in your business on TechRepublic.

Also see

istock-1054574038.jpg
Image: iStockphoto/metamorworks

By Alison DeNisco Rayome

Alison DeNisco Rayome is a Senior Editor for TechRepublic. She covers CXO, cybersecurity, and the convergence of tech and the workplace.